AAII Sentiment Survey Results For Frame Ended 24 February 2016
The AAII Investor Sentiment Survey measures the percentage of individual investors who are Bullish, Bearish, and Neutral on the stock market for the next 6 months; individuals are polled from the ranks of the AAII membership weekly. Just 1 vote per member is accepted in each weekly sentiment voting frame
Data represents what direction members feel the stock market will be in the next 6 months
Bullish: 31.2%, + 3.6
Neutral: 37.4%, + 2.8
Bearish: 31.4%, – 6.4
Change from last week:
Optimism among individual investors about the short-term direction of stock prices is above 30% for the st time since Thanksgiving, according to the latest AAII Sentiment Survey. Pessimism fell to its lowest level of Y 2016 as it continued to pull back from its recent highs. Neutral sentiment rose.
Expectations that stock prices will rise over the next 6 months, rose 3.6 percentage points to 31.2%. This is the highest level of optimism recorded by our survey since 26 November 2015 (32.4%). The rebound ends a streak of 12 weeks running with Bullish sentiment readings below 30%, the longest such streak since Y 1993. Even with the improvement, optimism remains below its historical average of 39.0% for the 16th straigh week and the 49th out of the past 51 weeks.
Expectations that stock prices will stay essentially unchanged over the next 6 months, rose 2.8 percentage points to 37.4%. This is the 56th time in the past 60 weeks that Neutral sentiment is above its historical average of 31.0%.
Expectations that stock prices will fall over the next 6 months, dove 6.4 percentage points to 31.4%. Pessimism was last lower on 31 December 2015 (23.6%). Even with the drop, pessimism remains above its historical average of 30.0% for an 8th consecutive week and for the 10th time in 11 weeks.
After nearly hitting a 3-year high two weeks ago, Bearish sentiment has fallen by a cumulative 17.3 percentage points.
Over the same frame, Bullish sentiment has rebounded by a cumulative 12.0 percentage points. The shift has happened as both large and small-cap stocks may have set a short-term bottom, maybe not.
The recent improvement in sentiment has only been enough to lift optimism to just above the lower end of its normal historical range.
Many individual investors are still concerned about the pace of economic growth in the US, the pace of economic growth in China, tensions in the Middle East, the rate of earnings growth and prevailing valuations.
This week’s special question asked AAII members for their opinion about the current pace of economic growth.
29% described the rate of growth as slow, very slow or sluggish. About 8% said economic growth is too slow. An additional 8% describe growth as unacceptable, disappointing or terrible.
6% perceive the economy as getting weaker or at least experiencing a slowing pace of expansion.
5% think the economy is strengthening.
Many respondents blamed Washington politics for hampering growth.
By Charles Rotblut, CFA, AAII Journal
Paul Ebeling, Editor